What I plan for this blog – my 2016 savings goals
You’ve gotten an idea of my strategy, what I believe and what my goals are and now it’s time for me to start tracking these things on this blog.
What I’m going to try to do is post two monthly updates that show my portfolio total and also my month by month dividend growth. The portfolio total will allow me to track where I am in relation to my goals and the dividend growth will be a good morale boost for when times in the market get a bit tough. I’m not a dividend investor per se but most of my funds and etfs are dividend payers as is a lot of the market so hopefully we’ll be seeing growth on that end as well. It’ll be nice to see that number tick up as dividends certainly give you that sense of freedom as it’s income you can see and use. I don’t personally reinvest dividends using DRIP in my individual accounts(I do in my tax-advantaged accounts) but use the cash generated to selectively buy securities or etfs that I think have good value.
I will also likely track my monthly savings rate as a % of overall income for the month. In the end, early retirement is as much about savings rate as it is about returns especially since you can control one and not the other.
I’ll start it off with an in depth analysis of my current portfolio and how it ties back to my asset allocation. My lackadaisical approach to all this lately means it may be time for some re-balancing and re-evaluation but this is why I’m taking this journey in the first place – to make sure I’m on track and to make me do the research I know I need to do to get there.
Beyond portfolio and dividend updates, I’ll also be doing stock analysis on a regular basis and discuss my purchases and sales.
The end goal here is to have enough funds to retire at 45 whether that be through selling securities or dividend payments. I do plan to buy a house sometime between now and then so that may cut into my savings a little bit whenever that occurs.
I don’t have a particular goal in my in terms of actual net worth before I can comfortably retire nor do I plan to stop working all together when that happens. However, I’d like to have the ability to be financially independent in the nextt 10-15 years so I can have more options in the future.
I ran some simulations using firecalc and based on a current portfolio total of 300k and a spending target of 50k adjusted for inflation, I can retire by 2030 if I make annual contributions of 35k per year until then with no contributions after. Naturally, this is just a simulation so it’s not something I can trust and it doesn’t take into account any life changes that may alter my need for an income level. The biggest question mark in all this will be ease of access to healthcare and managing expanding healthcare costs. I think that’s the main risk factor for most people looking towards early retirement because employer offered healthcare does save a ton of money on the annual cost side of things. I’m somewhat hoping that we’re headed towards a system that will somehow scale back the medical inflation in the future because that is one of my biggest worries as I try to start planning ahead. If medical cost inflation continues to be 5-8% year, that will certainly affect my ability to live on 50k/year.
For the time being, I will set that as my goal starting in 2016 with an aim for retirement in 2030 or even earlier if things go well.
The goal for 2016 will be to save 35k. I figure this will give me a good start towards that goal and I can adjust as needed if things change. I’d have to look back on 2015 to see what I saved this year but I think this new goal of 35k is a good deal above what I actually saved this year so it’s not like this’ll be easy for me. That’s why this blog was started – to keep me on my toes and to track my progress as the year moves along.. It’s certainly easier to lose track of any goals you set if you’re not tracking them actively so I plan to do that here. The added incentive of seeing my portfolio and dividends grow month by month should help me achieve those goals – a level of motivation I didn’t really have in years past.
There are also some personal things that might make it easier to hit these goals as well. My girlfriend’s lease expires at the end of January so she’ll be moving in with me starting then and splitting rent. I plan to divert all of that money into savings which should serve to increase my savings rate by about 10% on it’s own. As I mentioned before, I live in a pretty expensive city in an expensive state so halving rent will have a pretty big impact on what I am able to sock away. My lease expires towards the end of next year so that’ll be a crucial point for me as well as it’ll be time to decide whether or not to buy a house which may reduce my overall savings by a bit as I remove some cash that may otherwise be pushed into the stock market to put it towards a house payment. I’ll have to weigh the pros and cons of that when it comes down to it but buying a house may actually be a more prudent decision as rent prices have risen quite a bit in this area.
In the end it’ll be good to see what kind of savings rate I can achieve. I know some early retiree bloggers out there are hitting 60-80% savings rate which is something I won’t be able to do as my goals aren’t quite as extreme as theirs nor am I as frugal. In the end, I’m still after the same thing they are although it may take me a little longer to get there.
If you’re reading things, I welcome you and invite you to join me on this journey. I’d certainly like some back and forth on my strategies and any suggestions that may help me along the way. In ten years, I want to look back at this as the starting point of a long but successful journey and as the time where I finally put my plans together and decided that my lackadaisical approach wasn’t going to get me where I wanted to be ten years from now.
This is the of end of that and a start of something new, a more enthusiastic and calculated approach that will hopefully yield better results.